EU adds lithium to critical raw materials list www.mining.com

The European Union has added lithium, used in batteries that power electric vehicles (EVs), to a list of critical materials that it plans to support locally as part of a strategy to reduce reliance on imported supply.

The group of 27 nations will need about 60 times more lithium and 15 times more cobalt for EV batteries and energy storage by 2050, analysts estimate. EU demand for rare earths, used in high-tech devices and military applications, is predicted to increase 10-fold over the same period.

The European Commission, the EU’s executive arm, said on Thursday that the coronavirus pandemic has highlighted the world’s increasing reliance on electronics and technology for remote work, education and communication.

EUROPE WILL NEED ABOUT 60 TIMES MORE LITHIUM AND 15 TIMES MORE COBALT FOR EV BATTERIES AND ENERGY STORAGE BY 2050

As a result, shortages of the key elements needed in the manufacturing of those items threaten to undermine crucial industries and expose the EU to supply squeezes by China and other resource-rich countries, the Commission said.

“We have to drastically change our approach,” Maroš Šefčovič, Vice-President for Interinstitutional Relations and Foresight said in a statement. “We cannot allow replac[ing] current reliance on fossil fuels with dependency on critical raw materials.”

The EU imports around 98% of rare earths from China. Turkey supplies 98% of its borate, while Chile meets 78% of Europe’s lithium needs. South Africa provides 71% of its platinum and Brazil supplies 85% of the old continent’s niobium, a crucial part of steel alloys used in jet engines, girders and oil pipelines.

“We cannot afford to rely entirely on third countries,” European Industry Commissioner Thierry Breton added. “By diversifying the supply from third countries and developing the EU’s own capacity for extraction, processing, recycling, refining and separation of rare earths, we can become more resilient and sustainable.”

The Brussels, Belgium-based body, which first drew up an inventory of critical raw materials in 2011 in response to soaring commodity prices, also added bauxite, titanium — used in aerospace and for orthopaedic implants —, and strontium — an ingredients for EV magnets — to the list.

The body eliminated helium from the group of now 30 materials.

Raw Materials Alliance
As part of the strategy unveiled on Thursday, the European Commission vowed to create a raw-materials alliance by the end of the year.

The coalition will include industry members, investors, the European Investment Bank, EU countries and others that can help secure raw mineral supply chains.

The Commission also plans to promote recycling of vital elements, particularly rare earths. It said that while recycling works well in Europe, less than 1% of products containing the components are actually recovered to be treated.

The activity would drive investment and innovation within Europe, it noted.

The commission also said it wants to start a partnership with Canada and interested African countries next year.

Copper heads for historic squeeze with China’s demand red hot www.mining.com

The global copper market could be on the cusp of a historic supply squeeze as Chinese demand runs red hot and exchange inventories plunge to their lowest levels in more than a decade.

A growing chorus of traders and analysts say those dwindling spot reserves could trigger a further surge in prices, building on a rally that lifted copper this week to two-year highs above $6,800 a ton. Red Kite Capital Management LLP fund manager George Daniel said the market is starting to resemble that of the early 2000s, when a similar Chinese buying spree emptied the world’s warehouses of copper and sent prices vaulting to record highs.

The 24 million ton-per-year copper market has experienced bouts of tightness ever since the early days of China’s industrial expansion, but that country’s rampant appetite after emerging from coronavirus lockdown could usher in a period of chronic undersupply. China’s Caixin manufacturing purchasing managers’ index for August reached its highest reading since January 2011, with copper usage surging as factories pump out cars, household appliances, smartphones and electrical cables.

“This time it’s been different because China has been sucking everything up,” Daniel said in London. “It feels like we’re getting into a period where there’s just no copper around.”

Current conditions could push prices to $7,500 a ton, he said. Citigroup analysts are even more bullish, advising clients this week that a price of $8,000 is plausible if global stockpiles drop to near the levels seen in 2011, when copper reached a record $10,190 a ton. Copper declined 0.8% to $6,643 a ton on Thursday.

Evidence of a looming supply squeeze is mounting on the London Metal Exchange, where inventories are at their lowest levels in almost 15 years — only enough to last users a little more than a day. A year ago, they would have lasted five.

In the past, copper stored elsewhere in the global supply chain was diverted to the exchange’s storage depots. But now there are signs the metal may not flow back to the bourse so freely, given the strength of Chinese demand.

LME data shows there were about 120,000 tons of copper stored privately in Europe at the end of June, but none has materialized on the exchange, even with the region’s lackluster economic recovery. At the same time, the LME’s Asian depots are virtually empty. There are about 80,000 tons in Comex depots in the U.S., but manufacturing in the world’s top economy also is starting to snap back strongly.

Consumers and traders may be more reluctant to offload excess inventories out of fear that a fresh wave of coronavirus infections could reimpose havoc on supply chains. The desire to bolster reserves of raw materials was one factor driving the rapid rebound in orders as China emerged from lockdown, Trafigura, the world’s top copper trader, said in June.

With investment in copper-intensive sectors such as renewable energy and electric vehicles set to swell as countries start rebuilding their economies, manufacturers in previously weak markets like Europe also may look to boost their inventories, thus creating an additional pull on spot supplies.

Some traders and investors are still skeptical that plunging inventories on the LME reflect broader supply-and-demand conditions. But that may change as evidence points to consumers stocking up.

“We have lost some of the absolute perma-bears during this rally,” Luke Sadrian, chief investment officer at Commodities World Capital, said by phone. “You have to at least move to the center point.”

Still, rising production may relieve some of the strain. There are signs scrap dealers are offloading inventories to cash in on higher prices, and smelters in China are producing at an elevated rate, even as constrained supplies wilt processing margins. Mine production in South America also is starting to recover.

Copper and other exchange-traded commodities also have a built-in relief valve whenever inventories run low. Increased demand quickly drives up the value of spot contracts relative to futures, encouraging stockholders to sell excess inventories. That incentive to deliver has risen fast, with spot contracts last week trading at the biggest premium to benchmark futures in almost 18 months — a phenomenon known as backwardation.

While specialist commodities funds are turning bullish on copper’s tight fundamentals, long-term macro investors are starting to take a more favorable view of the metal as an asset that should hold up against a falling dollar and rising inflation, providing a further tailwind for prices, Daniel said.

“Everything is working for the copper price at the moment,” he said.

(By Mark Burton and Libby Cherry)

Export Credit Guarantee Agency needed to support Mongolian export growth www.mongolianbusinessdatabase.com

According to the Export Finance Study conducted by EuroChamber Mongolia in cooperation with MNCCI and funded by the European Union via the TRAM Project, Mongolian non-mining exports can be incerased by 50-80%, if suitable export financing solutions would become available. Export Credit Guarantee scheme, as a cornterstone of Government’s export promotion scheme is a necessary prerequisite for this.
 Export financing accounts today for less than 0.5% of the total corporate&SME loan portfolio of Mongolian commercial banks.
 The creation of an institutional and legal framework for export promotion is urgently needed (i.e. establishment of an ECA). Pre-export financing guarantee scheme is
critically important, in addition to post-shipment export financing, both for non-mining as well as mining products.
 The European Union will continue supporting Mongolia's economic diversification and equitable growth.
 EuroChamber Working group to be established to improve the legal framework for international trade finance instruments, esp. factoring and forfaiting.
28th of August 2020, MNCCI, Ulaanbaatar, Mongolia.
In a press conference, followed by a presentation and roundtable discussion, all stakeholders discussed the results of "Export Financing for Mongolian SMEs" study, the key
recommendation of which is to improve export-oriented legal framework and establish an Export Credit Guarantee Agency.
Opening the discussion, Mr. Marco Ferri, First Deputy Ambassador of the EU Delegation to Mongolia, said: “The European Union will support Mongolia's economic diversification and equitable growth. We will attempt to share know-how from relevant experience of the European
Union.”
The discussion was attended by more than 25 representatives of exporting companies, from the Ministry of Finance, the Ministry of Foreign Affairs, domestic commercial banks,
international financial institutions, the EU Delegation to Mongolia, the MNCCI and the TRAM project team.
The main finding of the study was that export financing in Mongolia accounted for less than 0.5% of the total corporate and SME loan portfolio of commercial banks. Study also shows that new banking products, esp. pre-export financing, lower interest rates and less demanding collateral requirements are desired by exporting companies.
"The availability of a government-backed export credit insurance will enable Mongolian commercial banks to provide better, cheaper and more accessible financing to exporters." -
Tomas Bravenec, Executive Director of EuroChamber Mongolia.
The main recommendation of the research team is to establish a “Berne Union” type Export Credit (Guarantee) Agency. This way, Mongolia has the potential to increase export of value-added products, increase the access to export financing by SME and large exporters, reduce the cost of financing, as well as impact of Covid-19 on the economy, and stimulate economic growth.
“Mongolia has a lot of untapped potential, and the involvement and support from the private sector is very important in establishing the Export Credit Agency (ECA). The alternative
to this, which is loan interest rate subsidies, is non-scalable, a “one-off” approach. Whereas using the same amount of funds for establishing an ECA would reap much more, and longer term benefits" - Carl Krug, Senior Private Sector Development Specialist, Mongolian Trade Promotion Project (TRAM).
EuroChamber Mongolia is envisaging working closely with public as well as private sector stakeholders to make the establishment of an ECA a strategic priority of the Government, as well as to work towards improvement of bankability of companies through capacity building.
“We are looking forward to continue our cooperation with EuroChamber on this strategically important topic. Export promotion, Government support and increased
competitiveness of our exporters is at the heart of our work at MNCCI.” – T. Duuren, CEO of MNCCI
Based on proposal of the participants, EuroChamber Mongolia will establish a working group to create legal environment for enabling international trade financing instruments such as
forfeiting and factoring to be used widely by commercial banks in Mongolia.

Australia in first recession for nearly 30 years www.bbc.com

Australia's economy has plunged into its first recession in nearly 30 years, as it suffers the economic fallout from the coronavirus.

Gross domestic product (GDP) shrank 7% in the April-to-June quarter compared to the previous three months.

This is the biggest fall since records began back in 1959 and comes after a fall of 0.3% in the first quarter.

An economy is considered to be in recession if it sees two consecutive quarters of negative growth.

Australia was the only major economy to avoid a recession during the 2008 global financial crisis - mainly due to demand from China for its natural resources.

At the start of this year, the economy was hit by falling economic growth due to an extreme bush fire season and the early stages of the coronavirus outbreak.

More recently the shutdowns of businesses across the country have taken their toll, despite measures by the government and central bank to support the economy.

This is the worst economic growth in 61 years due to a severe contraction in household spending on goods and services.

2020 will go down as a year to remember and a year everyone is already trying to forget! It's the year Australia technically lost its famous nickname as 'The Lucky Country' and fell into recession for the first time in almost three decades.

GDP figures from the Australian Bureau of Statistics have shown that the economy shrank by 7% in the last three months as a result of the coronavirus pandemic.

For young people who have recently joined the work force, this is something they've never experienced before. Australia has had a steady economy growth for decades with strong coal, iron ore and natural gas exports to a surging China. Tourism has also been a big driver of growth.

But this year, the country was hit hard. Twice. When the bushfires ravaged through more than 12 million hectares, tourism was bashed and thousands of small business lost months of essential seasonal revenue. Then the coronavirus became a global pandemic. Australia closed down its borders and imposed strict social distancing rules.

Nearly 1 million people lost their jobs as a result. I remember watching the long queues outside social and financial support offices back in March with people dazed at finding themselves in this situation perhaps for the first time in their lives.

There's also an increasingly tense relationship with China, Australia's biggest trading partner. Australia has strongly and publicly backed a global inquiry into the origins of the coronavirus in April which infuriated the Chinese government. Since then, Canberra and Beijing have exchanged political jabs and the Australian economy has felt the pinch.

Scott Morrison's government has already pumped more than A$200bn (£110bn; US$147bn) in economic stimulus. Australia has fared better than many other nations around the world in controlling the virus and in subsequent economic slump but this country of abundance will have to face a much harsher reality for a few years to come.

Australia last fell into recession in mid-1990 which ran into late 1991.

But the coronavirus pandemic has been a major blow to the Australian economy, although the figure is slightly better than the 8% fall Australia's reserve bank had earlier forecast.

Despite the severe drop in economic activity, Australia is doing better than most other advanced economies that have experienced bigger downturns.

The US economy, the world's biggest, shrank 9.5% between April and June while the UK's shrank by 20.4% pushing it into recession as well.

France's economy fell by 13.8% and Japan's by 7.6%.

46 electric buses to be put into service in October www.montsame.mn

Ulaanbaatar /MONTSAME/ Next month, a total of 46 electric buses, 10 double-decker and 36 single-decker buses, will be put into public transport service in Ulaanbaatar.

Ivanhoe expects first copper at Kakula in less than a year www.mining.com

Canada’s Ivanhoe Mines (TSX:IVN) expects to begin producing copper at its Kakula project in the Democratic Republic of Congo in less than a year, as total underground development to date has surpassed the 20 km mark – about 6 km ahead of schedule.

Students in Inner Mongolia Protest Chinese Language Policy www.nytimes.com

TAIPEI, Taiwan — Ethnic Mongolians, including students and parents, in China’s Inner Mongolia region are demonstrating their anger in rare public protests against a new bilingual education policy that they say is endangering the Mongolian language.

A high school student in the city of Hulunbuir said students rushed out of their school on Tuesday and destroyed a fence before paramilitary police swarmed in and tried to return them to class.

“We senior students were talking and we thought we had to do something,” said the student, Narsu, who like most Mongolians has only one name. “Although this doesn’t directly affect us now, this will have a huge impact on us in the future.”

The policy, announced on Monday ahead of the start of the new school year, requires schools to use new national textbooks in Chinese, replacing Mongolian-language textbooks. Protesters say they were aware of demonstrations and classroom walkouts in Hohhot, the provincial capital, as well as in the cities of Chifeng and Tongliao and Xilin Gol prefecture.

Nuomin, the mother of a kindergarten student in Hulunbuir, said she saw police in places she normally wouldn't and a metal barrier in front of one school. She has kept her child home since Monday.

"Many of us parents will continue to keep our kids at home, until they bring Mongolian back in those classes,” she said.

In 2017, the ruling Communist Party created a committee to overhaul textbooks for the entire country. Revised textbooks have been pushed out over the last few years.

The new policy for Inner Mongolia, a northern province that borders the country of Mongolia, affects schools where Mongolian is been the principal language of instruction.

Literature classes for elementary and middle school students at the Mongolian-language schools will switch to a national textbook and be taught in Mandarin Chinese.

Next year, the politics and morality course will also switch to Mandarin, as will history classes starting in 2022. Remaining classes, such as math, will not change their language of instruction.

Students will also start learning Mandarin in first grade. Previously, they started in second grade.

The move follows similar ones in other ethnic areas. In Tibet and Xinjiang, the primary language of instruction in such schools has become Mandarin, and the minority language is a language class.

The education bureau in Inner Mongolia did not immediately respond to a faxed request for comment.

China has been changing education under a new model of assimilation into the Han majority culture that leaves behind Soviet-inspired policies of promoting minority language education.

President Xi Jinping has said that if people don't speak the same language, it is difficult to communicate and achieve understanding.

“The ethnic minority schools, if they study well the language of communication in the country, it will be of great benefit to them in employment, in learning modern scientific and cultural knowledge and allow them to integrate into society," he said at a Central Ethnic Work conference in 2014. His words were quoted in the most recent policy document.

But for ethnic Mongolians, the new directive is creating fear that they will lose their mother tongue.

In the city of Tongliao, parents decided to take their children home from a boarding school on Monday. Many parents only found out about the policy after they had dropped off their children at school, said Nure Zhang, a Tongliao resident.

But authorities at one elementary school, backed by police, refused to let parents take back their children, according to Zhang, who attended the protest.

There were multiple clashes as parents and others rushed at the police, trying to get into the school, Zhang said. “They used a human wall to block us. We kept on singing and shouting slogans,” he said. The police used pepper spray twice on the protesters, he added.

At 9 p.m., the school principal and local officials said parents could take their children home.

Now the Mongolian-medium schools sit quiet in Tongliao. Local Communist Party leaders have been visiting each family to try to get the students to return, Zhang said.

Authorities have banned a popular Mongolian-language social media platform called Bainu.

Zhang, a parent as well, said he already felt they were heavily influenced by the Han, who make up 79% of Inner Mongolia's 25 million residents, according to the most recent census data from 2015. Ethnic Mongolians make up 17%.

“Now Chinese class is literature class, Chinese is the primary language and Mongolian has become a supplementary language," he said. “If this continues for 10 years, 20 years later, our language will slowly be forgotten."

Mongolia brings back over 250 nationals from U.S. amid COVID-19 pandemic www.xinhuanet.com

Mongolia has brought back a total of 254 stranded nationals from the United States on a chartered flight under the government's evacuation plan amid the COVID-19 pandemic.

Central bank updates financial statistics www.montsame.mn

Ulaanbaatar /MONTSAME/. Last week, the Bank of Mongolia provided update on the financial indicators of Mongolia and introduced the latest or 14th financial stability report released by the central bank jointly with other regulatory agencies.

As introduced by G.Dulguun, First Deputy Governor of the Bank of Mongolia, the financial stability report highlighted about the negative impact posed by the COVID-19 pandemic on the financial market stability of the country. Changes in the balance of payment, revenues and lending show the effect of the pandemic on Mongolia’s economy. In particular, the price and volume of export commodities have been dropping, leading to the decline in the export revenues.

In the second half of this year, the balance of payment deficit equaled to USD 679.2 million, and the government budget deficit decreased by 21.4 percent compared to the same period of last year and government budget balance showed a deficit of MNT 2.2 trillion.

Moreover, individuals and business entities who are suffering decline in their revenues due to the pandemic have also faced challenges to repay their loans, eventually posing risk to the financial industry. In order to stabilize the situation and stimulate economic growth, the central bank lowered the policy rate twice down to 9 percent and extended the maturity on consumer loans once up to 12 months for lenders experiencing difficulties, hence reducing the monthly loan repayments.

According to the report, in spite of the decline of the effectiveness in the banking industry as well as loan issuance rate, owner’s equity sufficiency and liquidity coverage ratio remain adequate. A study conducted by the National Statistics Office of Mongolia shows that economic and financial statistical indicators of all sectors, but banking sector, have been relatively stable.

The central bank also presented that money supply (M2) in Mongolia rose by 5.8 percent, reaching MNT 21.5 trillion, as of the first seven months of 2020, mostly influenced by foreign currency and Mongolian Tugrug savings.

Total loans in the banking industry reached MNT 17.2 trillion, as of the first seven months of 2020, which is made up of MNT 15.6 trillion of loans in Tugrug currency and MNT 1,6 trillion borrowings in foreign currencies.

Compared to the previous month, the total loan amount lowered by 0.3 percent, and nonperforming loans and overdue loans grew by MNT 24.6 billion and MNT 128 billion respectively, accounting for 11.3 percent and 6.6 percent of total loans. Average interest rate of new loans in Tugrug currency issued last month is 15.8 percent and 10.6 percent in foreign currencies. In July 2020, banks have issued mortgages to 1077 new borrowers, totaling MNT 74.8 billion. The weighted average interest rate of new mortgages equals to 10.7 percent. Average interest rate of savings in Tugrug currency is 10.5 percent and 3.2 percent in foreign currencies.

According to the central bank, total external debts of Mongolia reached USD 30.8 billion in the second quarter of 2020, climbing by USD 300 million since previous quarter. The growth reflects soft loans received from the Asian Development Bank, International Monetary Fund and the People’s Republic of China and an increase of market price of government-issued securities.

Thermal power plants to be built in 10 aimags in cooperation with ROK www.montsame.mn

Ulaanbaatar /MONTSAME/. Minister of Energy N.Tavinbekh has received Ambassador Extraordinary and Plenipotentiary of the Republic of Korea to Mongolia Lee Yeo-hong.